The qualitative parts of the study provided information on stakeholders' perceptions of the costs and benefits of key social provisions in public construction contracts. The study used the TRS project and tender details for 2519 non-residential government construction contracts awarded between 19974 and 2006. Another source of diversity in public non-residential construction works in WA is the size of the work undertaken.
Multi-Factor Analysis of Bid Activity
The following chart shows the bidding activity in the two market segments associated with the priority access policy during the analysis period. In fact, the opposite pattern is evident: the average number of bids was rejected for contracts not subject to the priority access policy during the analysis period, while there was negligible change in the average number of bids for bids subject to the policy. The following table shows information on changes in the average number of bids for contracts affected/unaffected by the construction skills policy between 2000 and 2004.
However, given the strength of the other influences on the construction market (as described in the previous section), there is a need for caution before drawing firm conclusions about the effects of the policy. OFi is a continuous variable based on the value of the building cost index in the month the bid was recorded. First, the function S, shown in the diagram below, represents the positive relationship between the pre-tender value of the contract and the number of bids.
Other factors in the model are expected to be associated with shifts in this function. Higher construction costs are likely to be associated with a downward/right shift of the function (implying a negative value of the coefficient on OFi).
Results of Quantitative Analysis
The data in Table 2 show that the implementation of the priority access policy in August 1999 had no significant impact on competition for government non-residential construction contracts in WA. The decline in bids observed during the implementation of this policy was similar in the "market segments" affected by the policy (ie, contracts valued at $150,000 or more) and in other parts of the "market." The value of the order also had a significant impact on the offer numbers in the analyzed period.
In this case, the analysis period extends from October 2000 to October 2004; Zi is defined by the introduction of the construction skills. Politics in October 2002; and PDi is defined by the policy's application to projects valued above $2 million. The results of this analysis are presented in Table 3 below. The data in Table 3 provide some evidence of a negative impact of the construction skills policy on bidding activity for non-residential public works contracts in WA.
The figures in Table 3 indicate a strong negative relationship between the construction cost index and the bidding figures. Finally, the bidding figures in the analysis period relevant to the Building Skills Policy were positively influenced by the value of the contract.
Discussion of Quantitative Results
Qualitative Analysis of the Training Provisions in Government Construction Contracts
Western Australia’s Priority Access Policy
The contracting authority, the Ministry of Housing and Works, also incurred few additional administrative costs – mainly related to the inclusion of the policy's provisions in the Ministry's tender and contract documentation. However, the DHW did raise concerns about the impact of the Priority Access Policy on tender prices, expressing the belief that the policy discouraged contractors from bidding for government contracts. The contractors interviewed during the survey did not provide any support for this proposal: they claimed that the policy had no effect on their willingness to bid for government contracts or on the level of their bids (more information on this can be found in the following paragraphs ). .
Contractors interviewed believed that they were already in compliance with the policy and that the policy was not the source of their company's training decision. It [the policy's training criteria] became so flexible over the years that people only had to show that they were committed to an education, that they were providing work experience, that they were employing university graduates, that sort of thing. The contractors who participated in the study were also fully aware of the lax enforcement of the policy – and apparently felt no pressure to change their training decisions as a result of the policy.
The ability of companies to determine the type of spending on staff development has clearly confused the intent of the policy and undermined efforts to monitor and enforce the policy. The policy would probably be more effective if it designated a small range of training activities (for example apprentices, trainees and cadets).
Western Australia’s Building Skills Policy
The policy officers interviewed were also skeptical about the positive effects of the Building Skills Policy. The evaluation of the Building Skills Policy was not very positive, there appeared to be no new apprentices, we could only find one, we could only identify one.” The critical reasons for the lack of success of these policies also appear to be related to measurement and monitoring problems.
First, once again, contractors appear to have found it easy to circumvent the provisions of the Policy (by limiting compliance incentives). The policy required that we could only count people who were working on site, we could only count people or trades that were actually working on site, so you had your cabinet makers and your refrigerators not counted, even though they were working for that building." However, the policy was associated with administrative costs for both government agencies and, to a lesser extent, contractors.
To the extent that this evidence is representative of the response of many contractors across the country, the policy can be seen to have reduced the pool of competitors for public procurement. There is no evidence in our transcript that the policy changed the level of training.
Queensland’s 10% Training Policy
The incidence of training for government projects may have increased due to these 'selection effects' of the Skill Building Policy. Contrary to these views and the opinions expressed by policy officers in WA government agencies, Queensland government representatives were positive about the benefits of the 10% Training Policy. Although the specific contribution of the Policy to the supply of skilled labor was difficult to quantify, officers were confident that the Policy had contributed to the creation of a training culture in the construction industry.
This is convened by the Queensland Department of Education, Training and the Arts to discuss issues with the Policy and suggest ways the policy could be. As this mechanism provides industry feedback on policy making in Queensland, it is likely to serve a positive role in communicating the objectives of the Policy and building shared commitments to training. Its absence from the policy framework in Western Australia may be an important omission that could be addressed in future developments of that state's policy framework.
Furthermore, the lack of robust evidence in both jurisdictions about the contribution of policy interventions to actual training outcomes raises questions about their net benefit. Moreover, especially during times when an NGO is easily accessible, policies do not affect the training decisions of the (much larger) group of firms engaged in NGO activity.
Other Multi-Outcome Policies
Indigenous Employment Policies
The qualitative evidence collected on the costs and benefits of these policies was limited by the scope and scale of the multi-outcome project. The Aboriginal Employment Policy for Queensland Government Building and Civil Construction Projects (IEP) Objectives The objective of the Aboriginal Enterprise. The tender preference is calculated as 10% of the tender amount, with the maximum tender preference set at $100,000.
The qualitative information gathered on the Aboriginal Enterprise and Employment Tendering Preference Policy suggests that it has had little to no effect. For example, data provided in a personal communication by a policy officer at the Department of Housing and Works indicates that the Policy only resulted in the award of one contract in seventy (or 1.43% of contracts that included bids from indigenous businesses ) influenced. Available data from January 2006 to 30 June 2006 indicate that 410 jobs were created by the IEP (20% policy) on 23 building construction projects and 43 civil construction projects.
In contrast, some study participants expressed concerns about the potentially transitory nature of the employment and training opportunities created by the policy. The commitment of operators and indigenous communities to the objectives of the scheme has been identified as a key component of its success.
Local Employment Policies
This provides a mechanism whereby the administrative and other costs of enforcing the Policy can be weighed against the potential benefits. The Local Industry Policy also contains a flexible approach to defining the local area, which is not evident in the WA Local Purchasing Policy. The stated objective of the Local Procurement Policy is 'To maximize supply opportunities for local Western Australian competition.
When evaluating tender offers, the regional content price preference scheme enables government agencies to determine the value of the total cost of goods and services purchased from businesses within s. The transcript evidence on the costs and benefits of the WA Buy Local Policy generally follows a similar pattern to that established in the discussion of the State's training policies. One of the main contractors interviewed thought that the Buy Local Policy acted as a negative incentive for 'external' (non-local) companies to bid on government contracts in certain areas.
Administrative costs were related to the development of local industry policy and the operation of the ICN. The impact of policy on contract costs also appears to have been limited by the flexible approach taken to defining 'local'.
Concluding Comments
This is done with reference to the existence of a competing pool of bidders – rather than a fixed geographical distance. This helps ensure that, even with the policy in place, sufficient bids are received for government construction contracts. One option is a levy on each public construction project – set as a percentage of the total project cost.
Although a full evaluation of this policy alternative was beyond the scope of the Multi-Outcome Construction Policies Project, it appears to offer the potential to reduce the transaction costs of contractors while enabling the creation of a training agency aimed at improving the supply of qualified builders. Ideally, the policy framework would have the flexibility to respond to circumstances where implementers are committed to policy objectives and able to identify measurable social outcomes of the individual government projects in which they are involved. As a final conclusion, the multi-outcome project has also demonstrated the potential for policy development in each country, drawing on the experiences of other jurisdictions.
It can thus be expected that there will be continued collaboration between state governments in research aimed at further improving education and employment outcomes through public construction projects. Public sector outsourcing: theory, evidence, prospects', Oxford Review of Economic Policy, Vol.
